Economic Report says: Africa, the only developing region achieving faster growth

Source: The Sub-Saharan Informer

ADDIS ABABA, Ethiopia -The Economic Commission for Africa (ECA) revealed Monday that Africa grew faster than any other developing region in 2001. At the launching of the Economic Report on Africa 2002 under the theme "tracking performance and progress," the ECA Economic and Social Policy Division at the UN conference Hall said, "Africa grew faster than any other developing region in 2001, reflecting better macroeconomic management, strong agricultural production, and the cessation of conflicts in several countries."

However, the report noted. "Africa’s average GDP growth of more than 4% in 2001 masks wide disparities among countries" adding that economic growth remains fragile. Given current rates of progress, Africa will not achieve the Millennium Development Goals set by the UN in 2000, it warned.

Asked about the impact of the recent US decision to subsidize its agriculture on Africa, Mr. Patrick Asea, Director of the Economic and Social Policy Division with the ECA said "the decision of the government of the US is really counter productive for Africa's growth. However, the African Growth and Opportunity Act (AGOA) presents enormous opportunities to African countries and enable them to export their commodities and benefit from the largest market in the world." He noted that it is a process, which is only one year and a half old.

Speaking on whether the current growth rates would help ' achieve the Millennium Development Goals (MDGs), he said, "there are wide disparities among countries. Yet the prospect of achieving the MDGs is very slim."

Regarding the impact of the September 11 terrorist attacks on the US, the report says, "the global slowdown has had a much less pronounced impact on Africa than expected. It has remained relatively strong, with growth accelerating in 2001 in countries such as Ethiopia (8.7% growth), Mozambique (9.2%), and Uganda (5.4%)." In addition, the report states Africa's overall GDP growth is estimated to have increased to 4.3% in 2001 from 3.5% in 2000.

The Report attributes Africa's resilience to global economic slowdown to factors such as lower oil prices, improvements in agricultural output, sound economic management, increased exports under the AGOA, reduced conflict and insecurity in Burundi, DRC, Eritrea, Ethiopia, Guinea and Sierra Leone. Furthermore, it states that there were international developments, such as debt relief under the enhanced HIPC and the rescheduling of debt by Paris Club creditors. It further states that in 2002 some African countries such as Ethiopia, Benin, Mali, Niger, Senegal, and Tanzania will benefit from debt relief under the enhanced HIPC initiative. Accordingly, the report notes, "Tanzania should see debt repayments slashed from $193 million in 2000 to $116 million in 2002, a savings of $77 million. Mozambique will benefit from an estimated 73% reduction in its external debt stock and a halving of its external debt service obligations."

According to the report the 2001 Expanded Economic Policy Stance Index of 23 countries shows that 10 countries scored good" in which South Africa (8.65) scored the top edging out Botswana (8.40) and Ethiopia (5.2). Among the 'good' cluster are Namibia, Ethiopia, Mauritius, Uganda and Mozambique. Whereas nine countries have fallen in the 'fair' cluster, four countries namely, Kenya (2.40), Burundi (1.00), Liberia (0.8), Sudan (0.5) have fallen in the least category (poor). According to the Index, Ethiopia moved from 'fair' (In 2000) to 'good' based on its Interim Poverty Reduction Strategy Papers (PRSPs), good targeting of the HIV/AIDS awareness, low Inflation, and cessation of hostilities with Eritrea. The Index attributes the least scores to civil and political conflict and economic mismanagement. Regarding the North African economies, the report says that the three largest north African economies-Egypt, Morocco, and Tunisia, which account for 25% of Africa's GDP -"offer the greatest potential bene1lts for Africa In 2002." Besides, it says, "Macroeconomic conditions are favorable In all three countries: Inflation is low, external reserves are adequate, debt has been reduced to more acceptable levels, and substantial progress on structural reforms."

"With oil prices likely to stay below $20 a barrel In 2002," the report says, "African countries are expected to grow by an average of 3.4% In 2002."

In the period 2001-02, the report estimated that oil exporters and non-oil exporters scored GDP growth or 4.1% and 3.7% respectively while Sub-Saharan Africa In general achieved 3.2%. On the other hand, the projected GDP growth or least developed nations is expected to show a sharp Increase from 4.8% in 2001 to 6.2% in 2002. Sub-Saharan Africa (GDP growth In 2001, 3.2%) In general is expected to show a projected growth rate or 3.7% In 2002.

The ECA announced that it would produce future editions or the Economic Report on Africa presenting In-depth studies or all African countries. In addition, it said it would produce reports on "Harnessing Technologies for Sustainable Development" In August, "Assessing Regional Integration in Africa" later this year and the "Africa Governance Report" early next year.